Today the Abu Dhabi National Oil Company (ADNOC) announced it has been collaborating with IBM to pilot blockchain across the supply chain. The new system tracks, validates and executes transactions from the oil well to the end customer. At this stage, it’s being used internally.
Currently, the platform is used to automate accounting between ADNOC operating companies by tracking quantities and financial values. Eventually, it will link to customers and investors.
“We believe this could be the first application of Blockchain in oil and gas production accounting anywhere in the world,” said Abdul Nasser Al Mughairbi, ADNOC Digital Unit Manager.
He continued: “Blockchain is a game-changer. It will substantially reduce our operating costs by eliminating time-consuming and labor-intensive processes, strengthen the marketing and trading of our products, and create long-term sustainable value that will ensure that ADNOC delivers on its 2030 smart growth strategy.”
“With this pilot, ADNOC takes a massive leap forward in asset provenance and asset financials, which, in its simplest terms, enables the ability to track irrefutably, every molecule of oil, and its value, from well to customer,” said Zahid Habib, VP or IBM’s Chemicals and Petroleum Solutions.
Other oil initiatives
VAKT, a consortium of oil companies, traders and banks launched last month. On the face of it, the aims seem similar: for post-trade processing. Initially, that platform is focusing on North Sea Oil. The group includes oil companies BP, Shell and Equinor; trading groups Gunvor, Mercuria and Koch; and banks ABN Amro, ING and Societe Generale. Several of the members are also part of the komgo trade finance consortium.
In North America, GuildOne has created a Royalty ledger for the Oil and Gas industry. Well operators who extract the oil have to pay the owner a royalty. The Royalty Ledger codifies the royalty contract into a smart contract. On a monthly basis the calculations are automatically made, and transparent for the relevant parties to see. And the system is integrated with a bank that executes the payments from operator to owner. Well operator NAL Resources estimates that it can cut a minimum of 30% of the cost of calculating and processing monthly royalties. It’s possible the saving could rise to 80% with volume measures automated.